CBOE Memories: Ed Tilly Looks Back


April marks the 40th anniversary of CBOE and the options industry.  As part of our month-long anniversary celebration, we’ve invited the CBOE community to share their memories of CBOE and four decades of options trading.  These are their stories…

It’s easy for me to pinpoint the luckiest day of my professional life.  As I approached graduation day in the Spring of 1987, I spotted a posting in the campus recruitment office from a trading firm looking for newly-minted graduates to work as clerks on the CBOE trading floor.

Clerks, I learned, phoned orders in and out of the trading crowd. The starting annual salary was $14,000, generous considering all that I did not bring to the options table, but I had already been offered twice that for a sales position in energy services.  (Obviously, a different job market back then.)

I took the lower-paying job, swept up in the excitement of the trading floor and the dream of becoming a trader. I reasoned that clerking would lead to trading even though the firm’s founder and owner, a guy named Steve Fossett, told me I would never trade, at least not for him.  Fossett required traders to have advanced degrees, but I was undeterred.  How hard could it be? 

After my first day on the floor, I had a different thought.  I will never understand this.  New clerks were expected to figure things out — and to stay out of the way.   I kept my eyes and ears open, shadowing Steve and other traders, trying to soak up their knowledge and keep my distance.  I read and re-read Options as a Strategic Investment and studied the “Greeks.”   I looked to other clerks and CBOE staffers to translate hand signals, trader talk and the quirks (to put it mildly) of those around us.  I learned the hard way not to believe everything they told me, especially if there was potential for a laugh.

It was mostly when the markets were quiet, and boredom set in, that the floor lived up to its reputation as the world’s oldest eighth grade.   We were pretty much captive from 8:30 to 3:10 in an era that predated iPhones and Blackberries.  Humor, in varying and usually descending degrees of sophistication, passed the time.  When the market moved, the place erupted in an adrenalin-fueled roar.  Play time was over.

Somewhere along the way it registered to me that Fossett, who rarely showed any emotion, grew even calmer in the storm.  His focus and trading acumen were legendary, and rightly so.  Nobody better understood the nuances of options trading; he was the master, elevating trading options around earnings and deals to an art form.   Despite his highly publicized adventures, Steve rarely talked about himself.  I learned more about him from his autobiography, Chasing the Wind, than I did in 15 years working beside him.

The only time I ever proved Steve wrong was in becoming a trader for him, but even that required a heap of luck and help from others.   There were many stops (from stock clerk, options clerk, OBO clerk, OBO broker, to market maker and DPM), with many lessons, along the way.   I’m indebted to Steve, of course, but also to so many others, including his right hand man, Bob Kirkland, and the many CBOE staffers who were so passionate about options and about CBOE and enthusiastically shared their knowledge and experience with me.  

There was always a sense that we were part of something special.   Both traders and staff were aware that we were pioneering a whole new trading world, and we worked together to make it happen.  Exchange employees were central to every one of CBOE’s long list of financial innovations.  The process by which innovations grew out of trader and staff committees was challenging, sometimes maddening, but ultimately exhilarating.  The drive to develop the “the next great thing” was deeply embedded in our culture, and it is as alive today as it has ever been.

Sometimes you only realize how lucky you are in retrospect, but I was as aware — or at least as aware as any twenty-something guy could be — that I had stumbled into something fantastic.   I would actually wake up on Sunday thinking I “get” to go back to work tomorrow.

People ask me what it’s like to be CBOE’s President after years of being a trader.  You guessed it, lucky.    Lucky to work all these years alongside Bill Brodsky – a guy who knows a thing or two about running an exchange.   I am lucky to have Bill’s support and that of the entire CBOE team — I am constantly learning from and inspired by them.

I am fortunate to be able to continue to work every day alongside people who are writing the next great chapter of the amazing CBOE story.

Happy anniversary to the entire CBOE community, past and present.

CBOE President and COO Ed Tilly will become CBOE Chief Executive Officer in May 2013. Prior to joining CBOE’s executive management team, he was a CBOE member from 1989 to 2006 and traded as both a market-maker and a designated primary market-maker (DPM).   

Be sure to visit the CBOE 40 hub daily as new memories will be added each day.